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“We want to make new things, with new thinking rather than a cheaper version of what we currently have,” he said. “The product and price balance must be made from scratch.”

Flag of the People’s Republic of China (Photo credit: Wikipedia)

China recently lifted a ban on video game consoles, albeit with the stipulation that the machines would have to be manufactured in the Shanghai Free Trade Zone, leading some to announce the salvation of the entire console business, and others to caution that this wouldn’t really have an impact on the broader industry. The first major console manufacturer to announce its plans to move in was MicrosoftMicrosoft, which partnered with Chinese company BesTV to launch its new Xbox One in the country.

The problem with Microsoft’s strategy, however, is that the Chinese people aren’t really hurting for video games. Free-to-play PC and mobile games have been flourishing for years, meaning that consumers have largely adjusted to a business model fundamentally different from paying $500 for a games-only box and $60 for every game on top of that. In addition, the wealthier Chinese who might have more interest in a big console might be more inclined to pick one up through the black market as a way of circumventing the country’s censorship guidelines. It’s a tricky situation.

That’s why it’s encouraging to hear Nintendo acknowledge that China is bound to be a different kind of console market than the western world or Japan. It’s talk right now, and it sounds like any actual product launch would be a very long way off. Nintendo is nothing if not cautious. But finding the right machine to take advantage of the Chinese market could prove a major boon to a company that just announced some massive losses, with no clear strategy for reversing them.

The other company that could be poised to take advantage of the new market is SonySony, thought not necessarily with its flagship PS4. The company is playing around with the Playstation Now streaming service, and I could see some cheaper hardware married to a flexible pricing system and streaming games doing quite well.

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